Last week, the company sold off its feature-phone business, and hinted that while it would continue to update software for its Lumia smartphones, it would develop no new Lumia hardware. But no new Lumia hardware doesn't necessarily mean no new smartphones.

Microsoft CEO Satya Nadella said the company will "continue to innovate across devices," an ambiguous phrase that could mean more hardware is on the way. The company is rumored to be working on a Surface Phone, a companion to its series of Surface tablets that could arrive next year.

Nadella also promised innovation in "cloud services across all mobile platforms."

But the company's phone efforts will be focused where it can differentiate its offering from the competition, he said.

As a consequence of the latest layoff plans, Microsoft will set aside $200 million for severance fees and write down the value of its More Personal Computing business, resulting in a total charge of around $950 million, it said. It expects to make most of the layoffs by year-end, with the remainder going by mid-2017.